As the debate in Washington rages over what the federal government should do to avoid the so-called fiscal cliff, there is some good news when it comes to state government budgets: Most are finally seeing their bottom lines stabilizing.
Earlier this summer, USA Today reported that revenues are predicted to be at a five-year high, meaning they will finally top totals last seen before the recession began. The newspaper added that state and local government spending is being tightly controlled as well; in fact, when adjusted for inflation, it’s at a level not seen since the 1980s.
Here in Kentucky, it appears that the days of cutting may be over. Since 2008, about $1.6 billion has been trimmed from state government, but the governor’s budget officials are saying that we’re on track to meet projections this fiscal year.
Their recent report highlighting the year’s first three months – July through September – found that state revenues grew 2.1 percent when compared to the same timeframe in 2011.
The officials say the fiscal year’s remaining three quarters are expected to grow at a slightly faster pace. If that happens, revenues would be less than $2 million off the official estimate used to write the budget. That’s just a tiny fraction of a percent when measured against the $9.3 billion set to be collected.
The Road Fund, meanwhile, is on track as well; it’s only expected to be just $36.5 million short out of a $1.5 billion budget.
If the overall news for the state’s budget is good – at least when compared to the last several years – it’s worth noting that this growth is somewhat of a mixed bag.
Corporate revenue during the first three months of the fiscal year, for example, was far ahead of where it was in 2011. At the same time, however, sales tax revenue was down – the first time that’s happened in more than two years.
Money from the coal severance tax dropped significantly, but lottery proceeds showed strong growth, and that was before the recent surge in Powerball sales due to a jackpot topping $500 million.
The job market is seeing a similar see-saw effect. Manufacturers have added more than 17,000 jobs in Kentucky since the first of July – an eight percent increase over the same period in 2011 – but the construction industry over the past year has seen strong gains one quarter wiped out during the next. Overall, Kentucky’s personal income growth is matching the national average, which shows we’re not getting left behind as the country emerges from the recession.
It may be some time before Kentucky and the nation see the kind of growth we experienced prior to 2007 and especially during the 1990s, but there is silver lining in the fact that it appears the worst is truly behind us. As the state budget director wrote in her quarterly report to Governor Beshear, “Overall, the economy continues to follow a slow but measured path of recovery.” In other words, the state may not be getting everything it wants this Christmas, but we know there won’t be a lump of coal in our stocking, either.